Hadley’s Find the Plan Right for Me questionnaire, explained

In what state do you (as the account owner) live?

All 529 savers avoid paying taxes on the investments' gains, and in more than 30 states, savers are eligible for additional benefits, such as state income tax credits or deductions. A few states allow their residents to apply the state-tax benefits to any 529 plan in the country. In these cases, Hadley recommends such users to enroll in gold-rated plans to maximize their benefits. But more often, residents forgo their home state's tax incentives if they choose a plan offered by another state. Hadley recommends those users to enroll in their highest-rated state-sponsored plans to qualify for those additional state tax benefits. For users who reside in states that do not offer additional state benefits, Hadley recommends those users enroll in gold-rated 529 Plans to maximize their benefits.

Based on your state residence, Hadley routes you to your top-rated plan that maximizes your benefits.

Who are you saving for?

  1. I’m saving for an existing child

    If so, how old is your child?

  2. I’m saving for a future child
  3. I’m saving for myself

    If so, when do you anticipate going to school? (years from now)

This question asks the user to identify the intended beneficiary of the 529 account. If saving for an existing child, knowing the age of the beneficiary is required for Hadley to recommend a plan that is most appropriate for the beneficiary’s age. This is relevant if the user prefers an age-based plan that becomes increasingly conservative over time as the beneficiary approaches 18 years old or as the target enrollment year approaches. If the user is saving for a future child, and if the user prefers an age-based 529 plan (see next question), then we recommend age-based plans that correspond to age 0 for the beneficiary. If the user is saving for their own education, and if the user has a defined target timeline for when the funds will be needed and prefers an age-based approach (see next question), then we recommend age-based plans that correspond to the age that equals the number of years until the target date subtracted from 18. For instance, if a user wants to save for her own education and wants to use the funds in 5 years from now and also wants to use an age-based approach (see next question), Hadley recommends age-based plans that correspond to age 13 (18-5).

As I get closer to my target date for when I will need to use my education savings, I personally prefer to transition to more stable investments (less likely to lose value, but also likely to gain less value)

  1. Agree
  2. Disagree
  3. I'm not sure

This question asks the user to select their preference for age-based or static plans. This question guides the user to understand that as it gets closer to the time when the user needs the money to make their first qualified education expense (e.g., their first tuition payment), the investments in an age-based plan gradually shift into more conservative assets that reduce the risk in your portfolio, but also reduces the growth potential.

Users who responded “Agree” should enroll in age-based plans shift gradually over time in a “set it and forget it approach” such that the asset allocations become increasingly conservative as the target enrollment year or age approaches. The age-based portfolios have been especially designed and curated based on your education savings time horizon. For this reason, the majority of American 529 account holders are in age-based plans. For users who select A , Hadley recommends age-based plans that correspond to the age based on your responses from Question 2 (see above).

Users who responded “Disagree” do not want his/her/their investments to auto-shift into gradually more conservative portfolios, so Hadley recommends these users to enroll in Static Plans whose risk profiles remain fixed over time.

Hadley humanizes the process around saving for education because some users may lack the financial sophistication to understand this question. An option “I’m not sure” is made available. In these cases, Hadley recommends enrolling in age-based plans to the age based on your response from Question 2 (see above). If you’re not sure, Hadley recommends age-based portfolios because they have been professionally and strategically curated by the 529 Program’s program and investment managers based on your personal education savings timeline.

Which best describes your investment approach?

  1. Conservative
  2. Moderate
  3. Aggressive
  4. I don't know

Some investors are comfortable with wide market swings, and others prefer less fluctuation with a generally lower return potential. For users who self-identify their risk acceptance, Hadley recommends plan options that align to their preferred risk acceptance level of conservative, moderate, or aggressive. It’s important to keep in mind there’s no right or wrong answers to this question: it’s based on what feels right and comfortable to you.

For users who are unsure, they are encouraged to select “I don’t know.” Hadley humanizes the process around saving for education because some users may lack the financial sophistication to understand this question. An option “I’m not sure” is made available. In these cases, Hadley guides the users through scenarios in questions 5-8 to understand the user’s personal savings style when it comes to their risk acceptance levels.

Imagine your 529 account declines in value 15% in one year. For example, imagine your 529 account at the start of the year had $35,000, and by the end of the year, it had $29,750. Which of the following are you more likely to do?

  1. Change the entire portfolio

    If a portfolio goes down 15%, it is obviously too risky for me. This would keep me awake at night.

  2. Move some, keep some

    Move some of the funds to less risky investments, but keep some of the funds in the original portfolio.

  3. Stay the course

    I have a long-term perspective for my education funding assets. I understand that my portfolio can decline in the short term, but I am willing to accept short term losses if that is what it takes to earn a potentially higher long-term rate of return.

This question assesses the user’s risk tolerance, acceptance, and preference. This question goes to the heart of what we mean by Risk Tolerance -- the ability to stay the course in the face of declining portfolio values. Users who select Choice A receive 1 point; users who select choice B receive 2 points; users who select Choice C receive 3 points.

It’s important to know if external factors might cause you to take out money from your education savings 529 account prematurely. How likely is it that you will be able to keep all of your contributions in the plan until the student begins college?

  1. Unlikely

    I can think of a number of reasons why I might not maintain the plan for the full period contemplated.

  2. Somewhat doubtful

    I can envision certain situations where I would need to take money out of the plan early.

  3. Very likely

    I have adequate insurance coverage and emergency funds set aside, so it is unlikely I would need to take funds out of my education savings 529 account prematurely.

This question assesses the user’s risk tolerance, acceptance, and preference. This question is designed to confirm your investment time frame, a key element in age-based portfolios, as well as static portfolios. Users who select Choice A receive 1 point; users who select choice B receive 2 points; users who select Choice C receive 3 points.

Adding funds to your account periodically reduces overall portfolio risk. Which statement best describes your plans?

  1. I do not plan to make future contributions to this account.
  2. I plan to make contributions as I am able, but probably not every year.
  3. I plan to make annual contributions of about the same amount each year.
  4. I plan to make contributions as I am able, and also plan to receive some 529 gift contributions from family members and friends.

Investor suitability: This question assesses the user’s risk tolerance, acceptance, and preference. This question focuses on the pattern of your planned future contributions. Regular contributions create a form of income averaging, which reduces overall portfolio risk and thereby allows you to adopt a more aggressive initial allocation. Users who select Choice A receive 1 point; users who select choice B receive 2 points; users who select Choice C or D receive 3 points.

How important is it to hit your goal?

  1. Important, but not critical.

    I’d like to accumulate as much as possible towards my goal, but if I don't make the goal I have in mind, other resources are available (I might be earning more in my career, other family members might volunteer to help, or my child may qualify for scholarships or other assistance).

  2. Very important.

    If my goal is not achieved, I will likely have to do more borrowing than I am comfortable with. Incurring extensive loans may impact my ability to save for my own retirement after my child starts college. Neither would I like to burden my child with extensive loans to repay soon after graduation.

This question assesses the user’s risk tolerance, acceptance, and preference. To the extent that the user indicates that achieving education goals in mind isn't absolutely critical, the less aggressive the user needs to be with their initial asset allocation. Users who select Choice B run a risk for under-saving for their education goals, meaning that not saving enough may require more borrowing for tuition payment that the user might be comfortable with and will therefore run the risk of borrowing more funds as opposed to saving in a higher growth/higher risk plan, earlier on. Users who select Choice A receive 1 point; users who select Choice B receive 3 points.

Tally the points:

  • For questions 5-7:
    • 1 point for each A response;
    • 2 points for each B response;
    • 3 points for each C or D response.
  • For question 8
    • users who select A receive 1 point;
    • users who select B receive 3 points.

Based on your total points, Hadley recommends plans that correspond to the following risk acceptance level based on your responses.

Background Gradient
Conservative:
4 - 6.6
Moderate:
6.7 - 9.2
Aggressive:
9.3 - 12

For users who want age-based plans, some 529 Programs’ age-based plans only have one standard blended risk option. In this case, Hadley recommends the age-based that corresponds to your timeline horizon.

For users who want static plans (see Question 3), Hadley recommends a static plan that corresponds to the user’s risk tolerance identified here.

Disclaimer: Most 529 Plans have menus broken out by conservative, moderate, and aggressive tracks, but some 529 Plans offer just one blended risk option. In the cases where we recommend a blended risk level plan, it’s because the plan is top-rated, has low fees, and maximizes your federal and any eligible state tax breaks.

This document is not meant to be nor should it be considered investment advice. Hadley utilizes the information in the “Find the Right Plan for Me” Questionnaire in order to deliver the most appropriate 529 Plan recommendations; accurate responses are critical to this mission.

Please download the Hadley app to receive your free 529 plan recommendation. The material contained on this website is not intended to be a recommendation or investment advice, does not constitute a solicitation to buy, sell or hold a security or investment strategy and is not provided in a fiduciary capacity. The information provided does not take into account the specific objectives or circumstances of any particular investor or suggest any specific course of action. Investment decisions should be made based on an investor’s objectives and circumstances and in consultation with her or her financial professionals. Past performance is no guarantee of future results. There can be no assurance that any investment will achieve its objectives or avoid substantial losses.

All research and other information provided on this website has been prepared for informational purposes only and Hadley Investment Co. assumes no liability or responsibility for any errors or omissions in the content of this website or any linked website.